Energy employees win appeal of outsourcing decision

A recent decision on a bid protest gives maintenance employees at the Energy Department a second chance to prevent their jobs from being outsourced.

The decision, issued by Richard Hopf, the department's senior procurement executive, in late July and released to the public on Tuesday, requires contracting officials to rethink the outcome of a public-private competition for about 90 maintenance jobs. A small Alexandria, Va.-based company called Logistics Applications Inc. won that contest in late February.

Hopf upheld claims by two employee representatives that Logistics Applications won the contest based on criteria that hadn't been announced when the department solicited bids. His decision will force Energy's contracting officer to reconsider the basis on which bids were evaluated and rerun the contest if necessary.

Energy conducted the public-private competition using the "best-value" model, where a contract is awarded based on a combination of price and technical qualifications. In the solicitation for bids, contract officials stated that they would make a decision based on seven equally weighted factors.

The in-house team and Logistics Applications came out even on all of the relevant factors except for price and personnel, Hopf stated in his decision. The in-house team underbid Logistics Applications by $2.6 million, but the officials on the selection team decided that the contractor came out on top in the personnel category, because it offered to work longer hours and its employees had stronger resumes, according to the decision document.

The selection team gave the company an edge because it offered a better value when analyzed as cost per hour worked. But in challenges filed with the department on April 19, National Treasury Employees Union President Colleen Kelley and a formal representative of the in-house team known as the "agency tender official," argued that price per hour hadn't been stated as a standard for evaluating the bids. Kelley filed her protest as an individual elected to represent the affected employees, rather than in her capacity as a union leader.

"Had the selection criteria been stated to include consideration of a price per [hours worked], then the offerors could have reasonably concluded that it was beneficial to provide greater quantities of hours by lower skilled and lower-priced personnel," Hopf wrote in the decision.

Logistics Applications also failed to show that it would provide better service "merely because of relatively greater hours," Hopf stated.

The decision represents an "important victory in ensuring that federal employees are treated fairly," Kelley said in a statement Wednesday. Logistics Applications' bid "clearly was not the best value for the Energy Department or taxpayers," she argued, adding that it was "fundamentally unfair to base the performance decision on factors not disclosed in advance."

But Daniel Center, legal counsel and contracting officer for Logistics Applications, said the extra hours his company offered should have been considered as an enhancement over the "way the government wanted to do things." Further, Energy asked bidders to provide information on hourly rates, he said, and was not trying to hide any selection criteria.

The decision was based on "tortured reasoning," Center said. He noted that Hopf only upheld the protests on two of nine allegations.

Logistics Applications is waiting to see what happens when the contracting officers review the award, as directed by Hopf, Center said. But should the Energy officials decide to deny the work to Logistics Applications, the company likely will file its own protest, he said.

Regardless of what happens, the delay in determining a winner will be detrimental, Center said. "As an outsider coming in to compete, we can't postpone indefinitely when we do this contract," he said. He noted that such legal squabbles make public-private competitions unattractive to contractors.